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Crystal River nuclear plant to close

Coal plants will remain

In this Aug. 6, 1999 file photo, a nuclear shift supervisor monitors part of a large control panel in the control room at the Crystal River Nuclear Plant in Crystal River. The nuclear facility is being closed.

Published: Tuesday, February 5, 2013 at 9:25 a.m.

Last Modified: Tuesday, February 5, 2013 at 3:05 p.m.

The fate of the Crystal River nuclear plant, which has been out of commission since 2009, became clear Tuesday when owner Duke Energy announced it will close the facility and end any possibility it will ever crank out another kilowatt of electricity.

The North Carolina-based utility giant also announced that the company and its insurance carrier, Nuclear Electric Insurance Limited (NEIL), have reached a resolution through mediation requiring NEIL to pay Duke $530 million in settlement costs in addition to the $305 million already paid out.

Duke said in a press release that its customers will receive the combined $835 million in proceeds.

Duke subsidiary Progress Energy, which operates the plant, previously agreed in a settlement with Florida's Office of Public Counsel that there would be no cost increases associated with Crystal River before 2017.

Progress supplies electricity to more than 1.6 million Florida customers, including about 60,000 in Marion County.

The plant, which employs 600 people in Citrus County, shut down more than three years ago when its concrete containment building cracked during an upgrade project that included installation of two new steam generators.

The containment building, which is designed to contain any radiation in case of a leak, is filled with a complex web of tension bars that give the facility added strength.

A March 2011 repair attempt resulted in new cracks in other parts of the containment structure, and more cracks were found during July of that same year. That left analysts to predict new repair costs falling between about $1 billion and $3.4 billion.

Progress already has spent $338 million in repairs thus far.

"We believe the decision to retire the nuclear plant is in the best overall interests of our customers, investors, the state of Florida and our company," Duke Energy Chairman and Chief Executive Jim Rogers said in a statement.

The decision marked the end of at least one chapter of company infighting after Duke merged with Raleigh-based Progress almost a year ago.

Rogers' expected successor, Progress Energy CEO Bill Johnson, was fired by the Duke board, in part because of its dissatisfaction over his handling of the Crystal River repairs. The plant at one time supplied 9 percent of Progress' energy production portfolio.

The 960-megawatt plant became operational in 1977 and was slated to have its license renewed another 20 years after its original operational license expires in 2016.

"I'm saddened by the decision, but it's not a big surprise based on the numbers I was seeing," said Charles Rehwinkel, deputy public counsel, who represents consumers before the Florida Public Service Commission.

"The risk of a successful repair was increasing — not to say it couldn't be done … it was just a matter of enough money and time," he said.

But time became an ever increasing problem.

If there had been more complications in trying to repair the containment building, Rehwinkel estimated the plant would have remained off line an additional five or six years.

The goal was to convince Progress to repair the nuclear plant, Rehwinkel said, because the long-term costs to customers will now be larger when the plant is shut down. That belief was reflected by the Office of Public Counsel's 2012 agreement with Progress requiring the utility to pay customers $100 million if repair work didn't commence by December 2012.

Rehwinkel concedes some insurance money will be earmarked to reduce customers' bills. But he still estimates that final costs to customers, because of the plant's closing, will be well more than $1 billion over 20 years.

He predicts rates will increase an average of $10 per month per customer when all the dust settles.

He attributes some of that hike to net plant appreciation costs, the costs for the unused steam generators, recently purchased nuclear fuel that will now go unused, and wasted spare parts.

But only time will tell how much the closing will cost shareholders and the public, he said.

"I think the bottom line is that we're still looking at our (the Office of Public Counsel's) rights and options here," he said, "And we're still studying what they announced."

The Florida Public Service Commission also must approve the closing of the plant and decide if it is the most prudent move.

Meanwhile, Duke said Tuesday it was considering whether to build a new, natural gas-fueled power plant to replace the power lost from the Crystal River nuclear plant.

Such natural gas plants typically cost about $1 billion and could be operational by 2018.

Progress also still has in the works plans to build two nuclear reactors in Levy County. Originally slated to be operational by 2016 at a cost of between $4 billion and $6 billion, the estimated price tag has ballooned to as much as $24 billion and the operational date has been pushed back to 2024 at the soonest.

Rehwinkel doesn't think the decision to mothball Crystal River will affect the proposed Levy County facility.

"I don't think it is in any way connected to Levy County," he said.

Rehwinkel thinks the Levy County plant's weakness is its $24 billion price tag, which will eventually derail the project.

"The (Crystal River) plant was doomed to its original life span (slated to close 2016) due to its concrete," he said, noting that the concrete mixture used was uniquely poor in its ability to bend and accommodate the tension bars inside the walls.

Ted Kury, director of energy studies at the University of Florida, predicted the closure is no indication that other nuclear plants will share the same fate.

"You're talking about a specialized type of damage (at Crystal River) and a repair technique that has been used successfully elsewhere," Kury said. "They reached a point where repair costs exceeded benefits."

But the plant's demise should not be a cause for celebration, he said.

"It's another source of energy (nuclear power) that we have in Florida where we didn't have to import fuel on a daily or monthly basis," Kury said.

Currently, there are only two other functioning nuclear power plant facilities in Florida: the St. Lucie Nuclear Power Plant on Hutchinson Island, near Fort Pierce, in St. Lucie County; and the Turkey Point Nuclear Generating Station east of Homestead. Neither are owned by Duke Energy.

Duke owns a total of seven nuclear units, including Crystal River.

As for natural gas, the price is relatively low, but Kury warned that U.S. energy companies are already planning to export vast supplies oversees, where prices are higher and more profit can be made.

"And at some point that will lead to upward price pressures," he said. "Prices are low right now only because we can't export it now."

Kury predicts that within the next 10 years 20 percent of the natural gas Americans use now will be exported.

Steve Smith, executive director of the Southern Alliance for Clean Energy, said the Crystal River closing reflects not only on Progress', but Florida regulators' unwillingness to halt the utility giant's poor decisions about repairs.

He said the PSC never should have let Progress go as long as it did, pouring good money after bad, and never should have allowed the utility to use in-house engineers in developing repair plans. Smith said the PSC "abdicated its responsibilities" and the public is now suffering for it.

Smith applauded Duke's decision, saying it had "inherited a mess" that was the result of "bonehead" repair decisions.

He warned that the same regulators who allowed Progress to fiddle when it came to wasting money on Crystal River, now are just as absent when it comes to the proposed Levy plant.

Progress Energy spokeswoman Suzanne Grant said several hundred people will be needed during the coming years to oversee the plant's closing. But she warned not all 600 will be needed for that work. Duke said in a press release it will try to incorporate as many of the 600 into other Duke plants as possible.

The Crystal River energy complex, which includes the nuclear facility, also includes four coal-burning plants. Two have been improved to meet federal environmental standards. Two are slated to close in the coming years.

Crystal River City Council member Paula Wheeler said the plant closing will not negatively affect the city or county's public image.

"I don't want to be disrespectful to the (employees), but I never associated the city Crystal River with the plant," Wheeler said. "We've stressed Crystal River's association with nature.

"We've certainly enjoyed the employment opportunities," she said, "but Crystal River is much more than a one-note community."

<p>The fate of the Crystal River nuclear plant, which has been out of commission since 2009, became clear Tuesday when owner Duke Energy announced it will close the facility and end any possibility it will ever crank out another kilowatt of electricity.</p><p>The North Carolina-based utility giant also announced that the company and its insurance carrier, Nuclear Electric Insurance Limited (NEIL), have reached a resolution through mediation requiring NEIL to pay Duke $530 million in settlement costs in addition to the $305 million already paid out.</p><p>Duke said in a press release that its customers will receive the combined $835 million in proceeds.</p><p>Duke subsidiary Progress Energy, which operates the plant, previously agreed in a settlement with Florida's Office of Public Counsel that there would be no cost increases associated with Crystal River before 2017.</p><p>Progress supplies electricity to more than 1.6 million Florida customers, including about 60,000 in Marion County.</p><p>The plant, which employs 600 people in Citrus County, shut down more than three years ago when its concrete containment building cracked during an upgrade project that included installation of two new steam generators.</p><p>The containment building, which is designed to contain any radiation in case of a leak, is filled with a complex web of tension bars that give the facility added strength.</p><p>A March 2011 repair attempt resulted in new cracks in other parts of the containment structure, and more cracks were found during July of that same year. That left analysts to predict new repair costs falling between about $1 billion and $3.4 billion.</p><p>Progress already has spent $338 million in repairs thus far.</p><p>"We believe the decision to retire the nuclear plant is in the best overall interests of our customers, investors, the state of Florida and our company," Duke Energy Chairman and Chief Executive Jim Rogers said in a statement.</p><p>The decision marked the end of at least one chapter of company infighting after Duke merged with Raleigh-based Progress almost a year ago.</p><p>Rogers' expected successor, Progress Energy CEO Bill Johnson, was fired by the Duke board, in part because of its dissatisfaction over his handling of the Crystal River repairs. The plant at one time supplied 9 percent of Progress' energy production portfolio.</p><p>The 960-megawatt plant became operational in 1977 and was slated to have its license renewed another 20 years after its original operational license expires in 2016.</p><p>"I'm saddened by the decision, but it's not a big surprise based on the numbers I was seeing," said Charles Rehwinkel, deputy public counsel, who represents consumers before the Florida Public Service Commission.</p><p>"The risk of a successful repair was increasing — not to say it couldn't be done … it was just a matter of enough money and time," he said.</p><p>But time became an ever increasing problem.</p><p>If there had been more complications in trying to repair the containment building, Rehwinkel estimated the plant would have remained off line an additional five or six years.</p><p>The goal was to convince Progress to repair the nuclear plant, Rehwinkel said, because the long-term costs to customers will now be larger when the plant is shut down. That belief was reflected by the Office of Public Counsel's 2012 agreement with Progress requiring the utility to pay customers $100 million if repair work didn't commence by December 2012.</p><p>Rehwinkel concedes some insurance money will be earmarked to reduce customers' bills. But he still estimates that final costs to customers, because of the plant's closing, will be well more than $1 billion over 20 years.</p><p>He predicts rates will increase an average of $10 per month per customer when all the dust settles.</p><p>He attributes some of that hike to net plant appreciation costs, the costs for the unused steam generators, recently purchased nuclear fuel that will now go unused, and wasted spare parts.</p><p>But only time will tell how much the closing will cost shareholders and the public, he said.</p><p>"I think the bottom line is that we're still looking at our (the Office of Public Counsel's) rights and options here," he said, "And we're still studying what they announced."</p><p>The Florida Public Service Commission also must approve the closing of the plant and decide if it is the most prudent move.</p><p>Meanwhile, Duke said Tuesday it was considering whether to build a new, natural gas-fueled power plant to replace the power lost from the Crystal River nuclear plant.</p><p>Such natural gas plants typically cost about $1 billion and could be operational by 2018.</p><p>Progress also still has in the works plans to build two nuclear reactors in Levy County. Originally slated to be operational by 2016 at a cost of between $4 billion and $6 billion, the estimated price tag has ballooned to as much as $24 billion and the operational date has been pushed back to 2024 at the soonest.</p><p>Rehwinkel doesn't think the decision to mothball Crystal River will affect the proposed Levy County facility.</p><p>"I don't think it is in any way connected to Levy County," he said.</p><p>Rehwinkel thinks the Levy County plant's weakness is its $24 billion price tag, which will eventually derail the project.</p><p>"The (Crystal River) plant was doomed to its original life span (slated to close 2016) due to its concrete," he said, noting that the concrete mixture used was uniquely poor in its ability to bend and accommodate the tension bars inside the walls.</p><p>Ted Kury, director of energy studies at the University of Florida, predicted the closure is no indication that other nuclear plants will share the same fate.</p><p>"You're talking about a specialized type of damage (at Crystal River) and a repair technique that has been used successfully elsewhere," Kury said. "They reached a point where repair costs exceeded benefits."</p><p>But the plant's demise should not be a cause for celebration, he said.</p><p>"It's another source of energy (nuclear power) that we have in Florida where we didn't have to import fuel on a daily or monthly basis," Kury said.</p><p>Currently, there are only two other functioning nuclear power plant facilities in Florida: the St. Lucie Nuclear Power Plant on Hutchinson Island, near Fort Pierce, in St. Lucie County; and the Turkey Point Nuclear Generating Station east of Homestead. Neither are owned by Duke Energy.</p><p>Duke owns a total of seven nuclear units, including Crystal River.</p><p>As for natural gas, the price is relatively low, but Kury warned that U.S. energy companies are already planning to export vast supplies oversees, where prices are higher and more profit can be made.</p><p>"And at some point that will lead to upward price pressures," he said. "Prices are low right now only because we can't export it now."</p><p>Kury predicts that within the next 10 years 20 percent of the natural gas Americans use now will be exported.</p><p>Steve Smith, executive director of the Southern Alliance for Clean Energy, said the Crystal River closing reflects not only on Progress', but Florida regulators' unwillingness to halt the utility giant's poor decisions about repairs.</p><p>He said the PSC never should have let Progress go as long as it did, pouring good money after bad, and never should have allowed the utility to use in-house engineers in developing repair plans. Smith said the PSC "abdicated its responsibilities" and the public is now suffering for it.</p><p>Smith applauded Duke's decision, saying it had "inherited a mess" that was the result of "bonehead" repair decisions.</p><p>He warned that the same regulators who allowed Progress to fiddle when it came to wasting money on Crystal River, now are just as absent when it comes to the proposed Levy plant.</p><p>Meanwhile, 600 Crystal River nuclear plant employees await their fate.</p><p>Progress Energy spokeswoman Suzanne Grant said several hundred people will be needed during the coming years to oversee the plant's closing. But she warned not all 600 will be needed for that work. Duke said in a press release it will try to incorporate as many of the 600 into other Duke plants as possible.</p><p>The Crystal River energy complex, which includes the nuclear facility, also includes four coal-burning plants. Two have been improved to meet federal environmental standards. Two are slated to close in the coming years.</p><p>Crystal River City Council member Paula Wheeler said the plant closing will not negatively affect the city or county's public image.</p><p>"I don't want to be disrespectful to the (employees), but I never associated the city Crystal River with the plant," Wheeler said. "We've stressed Crystal River's association with nature.</p><p>"We've certainly enjoyed the employment opportunities," she said, "but Crystal River is much more than a one-note community."</p><p><i>Contact Fred Hiers at 867-4157 or fred.hiers@starbanner.com.</i></p>